Israeli Expert: Defense budget demands could set back standard of living 20 years

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“If the Defense Ministry demand for an additional NIS 30 billion in 2007 to 2010 is accepted, Israel will return to the ‘Lost Decade,” – 1974-85 after the Yom Kippur War, when defense budgets dwarfed civil budgets and hyperinflation ran in triple digits, the official said yesterday.

“The government economist claims the demands are extravagant and would push Israel 20 to 30 years back economically, including a sharp drop in the standard of living.”

“The economist believes it is time for a civilian review of the tremendous defense spending in recent years, calling it inconceivable that with such large budgets, soldiers and reservists serving in Lebanon faced shortages of equipment, supplies, food and beverages.”

Defense officials are seeking NIS 30 billion, mostly in fiscal 2007 and 2008, for resupplying, reacquiring weapons systems damaged during the war and preparing for the next war based on the lessons of recent hostilities, including developing new arms. The defense establishment is working under the assumption the Israel Defense Forces needs to be prepared quickly.

However, according to a senior defense establishment official, cabinet compliance to the demand would subjugate the entire civilian establishment to military demands and constitute a mortal blow to civil budgets, including infrastructure and education.

“If the Defense Ministry demand for an additional NIS 30 billion in 2007 to 2010 is accepted, Israel will return to the ‘Lost Decade,” – 1974-85 after the Yom Kippur War, when defense budgets dwarfed civil budgets and hyperinflation ran in triple digits, the official said yesterday.

The government economist claims the demands are extravagant and would push Israel 20 to 30 years back economically, including a sharp drop in the standard of living.

The economist added that the defense establishment is already slated to receive NIS 2 billion additional funds, beyond the NIS 46 billion budgeted for 2006 and each year for the next several, but this is along way from the exaggerated demands presented in recent days.

He noted defense spending has not been cut back in recent years, in fact has increased several times beyond the approved budget through funding transfers for specific matters, such as during the second Palestinian intifada, construction of the separation fence and during disengagement from the Gaza Strip, all evident in a report by state comptroller Eliezer Goldberg.

The economist believes it is time for a civilian review of the tremendous defense spending in recent years, calling it inconceivable that with such large budgets, soldiers and reservists serving in Lebanon faced shortages of equipment, supplies, food and beverages.

The Prime Minister’s Office and treasury believe the defense establishment is under pressure in light of the repeated allegations in the media about its functioning during the war.

Convincing the rebels

Hirchson and Peretz will meet this afternoon with the Labor party rebels, MKs Avishay Braverman, Shelly Yachimovich and Orit Noked. Hirchson and Peretz hope to convince the three Finance Committee members to support a NIS 2 billion cut in the 2006 budget, scheduled for a vote tomorrow.

Hirchson will explain to the lawmakers that the cabinet decision to transfer NIS 2 billion from other items to the defense budget is critical for financing the war in Lebanon. He will also point out that Labor cabinet ministers supported this decision. Hirchson will reject charges that the NIS 2 billion cut will harm the underprivileged, noting that none of the money will come from social welfare ministries.

The Finance Ministry budgets division will also be represented.

It is likely that if the three refuse to vote in favor of the cabinet proposal in tomorrow morning’s committee vote, they will be replaced by MKs considered loyal.